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Fly News Breaks for January 28, 2020
Jan 28, 2020 | 10:28 EDT
Citi analyst Itay Michaeli believes that BorgWarner's (BWA) agreement to acquire Delphi Technologies (DLPH) is likely to increase investor focus on industry Powertrain consolidation, which means that American Axle (AXL) "could get another look from investors." His $13 price target on American Axle shares implies a mid-4 times EV/EBITDA multiple, whereas the implied multiple in the BorgWarner-Delphi transaction is 6.4 times 2019 adjusted EBITDA, or 5.2 times when synergies are factored, Michaeli tells investors. In terms of BorgWarner, he thinks the deal makes long-term strategic sense, but it comes at a high cost both financially and operationally.
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